some additional cuts, including making sure that we are reducing our health care spending, which is the man driver of our deficits, we can arrive at a package that gets this thing done. i'm happy to have that conversation. what i will not do is to have that negotiation with a gun at the head of the american people. the threat that unless we get our way, unless you got mut mede or medicaid, or, you know, otherwise slash things that the american people don't believe should be slashed, that we're going to threaten to wreck the entire economy. that is not how historically this has been done. that's not how we're going to do it this time. chuck what i'm saying to you is

that there is no simpler solution, no ready, credible solution other than congress either give me the authority to raise the debt ceiling, or exercise the responsibility that they have kept for themselves and raise the debt ceiling. because this is about paying your bills. everybody here understands this. i mean this is not a complicated concept. you don't go out to dinner and then eat all you want and leave without paying the check. and if you do, you're breaking the law. and congress should think about it the same way the american people. you don't -- if congress wants to have a debate about maybe we shouldn't go out to dinner next time, maybe we should go to a more modest restaurant, that's fine. that's a debate that we should

have. but you don't say in order for me to control my appetites i'm going to not pay the people who already provided me services. people who already lent me the money. that's not -- that's not showing any discipline. all that's doing is not meeting your obligations. you can't do that. and that's not a credible way to run this government. we've got to stopler muching from crisis to crisis to crisis when there's this crisis that requires some compromise. that's where we need to go. that's how this needs to work. >> thank you mr. president. as you well know, sir -- the debt ceiling can sometimes be complicated. you yourself in the senate voted against a debt ceiling increase and in previous aspects of

american history, president reagan in 1985, president george herber walker bush in 1990, president clinton in 1997 all signed deficit reduction deals that were contingent upon or in the context of raising the debt ceiling. you yourself four times have done that. three times those were related to deficit reduction or budget maneuvers. what chuck and i and i think many people about are this new adamant desire on your part not to negotiate when they seems to conflict with the entire history in the modern era of american presidents on the debt ceiling and your own history and the debt ceiling and doesn't that suggest that we are going to go into a default situation because no one is talking to each other about how to resolve this? >> no, major. i think if you look at the history geing votes for the debt ceiling are always difficult and budgets in this town are always difficult. i went through this just last year. what's different is we never saw a situation as we saw last year

in which certain groups in congress took such an absolutist position. that we came within a few days of defaulting. the fact of the matter is, that we have never seen the debt ceiling used in this fashion, where the notion was, you know what? we might default unless we get 100% of what we want. that hasn't happened. as i indicated before i'm happy to have a conversation about how we reduce our deficits further in a sensible way. although one thing i want to point out is that the american people are also concerned about how we grow our economy, how we put people back to work, how we make sure that we finance our workers getting properly trained and our schools are giving our kids the education we observe. there's a whole growth agenda which will reduce our deficits that's important, as well.

but what you've never seen is the notion that's been presented so far, at least, by the republicans, that deficit reduction will only count spending cuts, that we will raise the deficit -- or the debt ceiling dollar for dollar on spending cuts, there are a whole set of rules that had been establish established that are impossible to meet without doing severe damage to the economy. what we're not going to do is put ourselves in a position where in order to pay for spending that we've already incurred, that our two options are we're either going to profoundly hurt the economy and hurt middle-class families and hurt seniors and hurt kids who are trying to go to college, or alternatively we're going to blow up the economy. we're not going to do that.

not whatever congress asks me they're going to have to send me something that's sensible. and we shouldn't be doing this, and we shouldn't be doing this on a one to three-month time frame. why would we do that? this is the united states of america, major. we can't manage our affairs in such a way that we pay our bills and we provide some certainty in terms of how we pay our bills? look, i don't think anybody would consider my position unreasonable here. i have -- [ inaudible ] major, i am happy to have a conversation about how we reduce our deficits. i'm not going to have a monthly or every three months conversation about whether or not we pay our bills. because, that in and of itself does severe damage. even the threat of default hurts

our economy. it's hurting our economy as we speak. if we want to have a conversation about how to reduce our deficit let's have that. we've been having that for the last two years. we just had an entire campaign about it. and by the way, the american people agreed with me. that we should reduce our deficits in a balanced way that also takes into account the need for us to grow this economy. and put people back to work. and despite that conversation, and despite the election results, the position that's been taken on the part of some house republicans is that, nope, we got to do it our way. and if we don't, we simply won't pay america's bills. well, you know, that can't be -- that can't be a position that is sustainable over time. it's not one that's good for the economy now. it's certainly not going to be the kind of precedent that i want to establish not just for

my presidency but for future presidents. even if it was on the other side. democrats don't like voting for the debt ceiling when the republican's president and yet you -- you -- but you -- but you never saw a situation in which democrats suggested somehow that we would go ahead and default if we didn't get 100% of our way. that's just not how it's supposed to work. john carl? >> thank you, mr. president. on the issue of guns, given how difficult it will be, some say impossible, to get any gun control measure passed through this congress, what are you willing or able to do using the powers of your presidency to act without congress? and i'd also like to know, what do you make of these long lines we're seeing at gun shows and gun stores all around the country? i mean even in connecticut, applications for guns are up since the shooting in newtown.

>> well, my understanding is the vice president's going to provide a range of steps we can take to reduce gun violence. some of them will require legislation, some of them i can accomplish through executive action. and so i'll be reviewing those today, and as i said i'll speak in more details to what we're going to propose later in the week. but i'm confident that there are some steps that we can take that don't require legislation and that are within my authority as president. and where you get a step that has the opportunity to reduce the possibility of gun violence, then i want to go ahead and take it. [ inaudible ] >> well, if i think, for example, how we are gathering data. for exam 7, on guns that fall into the hands of criminals and how we track that more effectively, there may be some steps that we can take

administratively through legislation. as far as people lining up and purchasing more guns, i think that we've seen for some time now that those who oppose any commonsense gun control or gun safety measures have a pretty effective way of getting up fear on the part of gun owners that somehow the federal government's about to take all your guns away. and, you know, there's probably an economic element to that. it obviously is good for business. but, i think that those of us who look at this problem have repeatedly said that responsible gun owners, people who have a gun for protection, for hunting,

for sportsmanship, they don't have anything to worry about. the issue here is not whether or not we believe in the second amendment. the issue is are there some sensible steps that we can take to make sure that somebody like the individual in newtown can't walk into a school and gun down a bunch of children. in a shockingly rapid fashion. and surely we can do something about that. part of the challenge that we confront is that even the slightest hint of some sensible responsible legislation in this area fans this notion that somehow here it comes. and that everybody's guns are going to be taken away.

it's unfortunate. but that's the case. and if you look at the first four years of my administration we've tried to tighten up and enforce some of the laws that were already on the books. but, it would be pretty hard to argue that somehow gun owners have had their rights infringed. [ inaudible ] [ inaudible ] >> excuse me? >> [ inaudible ] >> as i said, i think it's a fear that's fanned by those who who are worried about the possibility of any legislation getting out there. joanna golden? >> thank you, mr. president. just want to come back to the debt ceiling, because in the summer of 2011 you said that you wouldn't negotiate on the debt ceiling, and you did. last year you said that you wouldn't extend any of the bush

tax cuts for the wealthy. and you did. so as you say now that you're not going to negotiate on the debt ceiling this year, why should house republicans take that seriously and think that if we get to the one-minute to midnight scenario that you're not going to back down? >> well, first of all, julianna, let's take the example of this year in the fiscal cliff. i didn't say i wouldn't have any conversations about extending the tax cuts. what i said was we wouldn't extend bush tax cuts for the wealthy and we didn't. you could argue during the campaign i set the criteria for wealthy at 250, and we ended up being at 400. but the fact of the matter is, millionaires, billionaires, are paying significa ining signific taxes just like i said. from the start my concern was

making sure that we had a tax code that was fair and that protected the middle class. and my biggest priority was making sure that middle class taxes did not go up. the difference between this year and 2011 is the fact that we've already made $1.2 trillion in cuts. at the time i indicated that there were cuts that we could sensibly make that would not damage our economy, would not impede growth, i said at the time i think we should pair it up with revenue in order to have an overall balanced package. but my own budget reflected cuts in discretionary spending. my own budget reflected the cuts that needed to be made. and we've made those cuts. now, the challenge going forward is, that we've now made some big cuts.

and if we're going to do further deficit reduction the only way to do it is in a balanced and responsible way. the alternative is for us to go ahead and cut commitments that we've made on things like medicare, or social security, or medicaid, and for us to fundamentally change commitments that we've made to make sure that seniors don't go into poverty. or that children who are disabled are properly cared for. for us to change that contract we've made with the american peop people, rather than look at options like closing loopholes for corporations that they don't need, that points to a long-term

trend in which, you know, we have fundamentally, i think, undermined what people expect out of this government. which is, is that parties sit down, they negotiate, they compromise, but they also reflect the will of the american people. that you don't have one narrow faction that is able to simply dictate 100% of what they want all the time, or otherwise threaten that we destroy the american economy. another way of putting it is, we got to break the habit. of negotiating through crisis. over and over again. and now is as good of a time as any at the start of my second term, because if we continue down this path then there's really no stopping the principle. i mean literally, even in divided government, even where we've got a democratic president, and a democratic senate, and a small group in the

house of representatives, could simply say every two months, every three months, every six months, every year, we are going to more and more change the economy in ways that we prefer, despite strong objections of americans all across the country, or our wise we're going to have america not pay its bills. and, you know, that is no way for us to do business. and by the way, i would make the same argument if it was a republican president, and a republican senate. and you had a handful of democrats who were suggesting that we are going to hijack the process and make sure that either we get our way 100% of the time or otherwise we are going to default on america's obligations. [ inaudible ] >> what i said is i'm happy to have a conversation about debt reduction. [ inaudible ] >> julianna, look, this is pretty straightforward.

either congress pays its bills or it doesn't. now, if -- and they want to keep this responsibility, if john boehner and mitch mcconnell think that they can come up with a plan that somehow meets their criteria that they've set for why they will -- when they will raise the debt ceiling, they're free to go ahead and try. but, the proposals that they've put forward in order to accomplish that, only by cutting spending, means cuts to things like medicare and education that the american people profoundly reject. now if they think that they can get that through congress, then they're free to try. but i think that a better way of doing this is to go ahead and say we're going to pay our bills, the question now is, how do we actually get our deficit

in a manageable sustainable way? and that's a conversation i'm happy to have. all right. max. >> thank you, sir. you've spoken extensively about the debt ceiling debate but some republicans have further said that they're willing to allow a government shutdown to take place rather than put off deep spending cuts. are you prepared to allow the government to griebd to a halt if you disagree with the spending cut proposals they put forward? and who do you think the american people would blame if that came to pass? >> well, ultimately, congress makes the decisions about whether or not we spend money and whether or not we keep this government open. and if the republicans in cook had made a decision that they want to shut down the government in order to get their way, then, they had the votes at least in

the house of representatives, probably, to do that. i think that would be a mistake. i think it would be profoundly damaging to our economy, i think it would actually add to our deficit, because it will impede growth. i think it's short-sighted. but, they're elected representatives, and folks put them in to those positions, and they're going to have to make a decision about that. and i don't -- i suspect that the american people would blame all of washington for not being able to get its act together. but -- but -- but the larger issue here has to deal with what is it that we're trying to accomplish? are we trying to reduce the deficit? because if we're trying to reduce the deficit, then, we can shape a bipartisan plan to reduce the deficit. i mean, is that -- is that really our objective? our concern is that we're spending more than we take in, and if that's the case, then there's a way of balancing that

out so that we take in more money, increasing revenue, and we reduce spending. and there is a recipe for getting that done. and in the conversation that i had with speaker boehner before the end of the year, we came pretty close. a few hundred billion dollars separating us when stretched out over a ten-year period. that's not a lot. but it seems as if what's motivating and propelling at this point some of the house republicans is more than simply deficit reduction. they have a particular vision about what government should and should not do. so they are suspicious about government's commitment, for example, to make sure that seniors have decent health care as they get older. they have suspicions about social security. they have suspicions about whether government should make

sure that kids in poverty are getting enough to eat. or whether we should be spending money on medical research. so they've got a particular view of what government should do. and should be. and, you know, that view was rejected by the american people when it was debated during the presidential campaign. i think every poll that's out there indicates that the american people actually think our commitment to medicare or to education is really important, and that's something that we should look at as a last resort in terms of reducing the deficit, and it makes a lot more sense for us to close, for example, corporate loopholes before we go to putting a bigger burden on students or seniors. but, if the house republicans disagree with that and they want to shut down the government to see if they can get their way on

it, that's their prerogative. that's how the system is set up. it will damage our economy. the government -- the government is a big part of this economy. and it's interesting that a lot of times you have people who recognize that when it comes to defense spending. some of the same folks who say we got to cut spending or complain that government jobs don't do anything when it comes to that defense contractor in their district, they think, wow, this is a pretty important part of the economy in my district. and we shouldn't stop spending on that. let's just make sure we're not spending on those other folks. [ inaudible ] >> look, my hope is that common sense prevails. that's always my -- my preference. and i think that would be the preference of the american

people and that's what would be good for the economy. so let me just repeat. if the issue is deficit reduction, getting our deficits sustainable, over time, getting our debt in a sustainable place, then, democrats and republicans in congress will have a partner with me. we can achieve that, and we can achieve it fairly quickly. i mean we know what the numbers are. we know what needs to be done. we know what a balanced approach would take and we've already done probably more than half of the deficit reduction we need to stabilize the debt and the deficit. there's probably been more pain and drama in getting there than we needed. and so finishing the job shouldn't be that difficult. if everybody comes to the conversation with an open mind, and if we recognize that there's some things like not paying our bills that should be out of

bounds. i'm going to take one last question. jackie. >> i'd like to ask you, now that you've reached the end of your first term, starting your second, about a couple of criticisms. one that's longstanding, another more recent. the long-standing one seems to have become a truism of sorts that you and your staff are too insular, that you don't socialize enough. and the second, the more recent criticism is that your team taking shape isn't diverse, isn't as diverse as it could be or even was, in terms of getting additional voices, gender, race, ethnic diversity. so i'd like you to address both of those. >> sure. let me take the second one first. you know i'm very proud that in the first four years we had as diverse, if not more diverse a white house and a cabinet than any in history.

and i intend to continue that. because it turns out that when you look for the very best people, given the incredible diversity of this country, you're going to end up with a diverse staff. and a diverse team and that very diversity helps to create more effective policymaking and better decision making for me, because it brings different perspectives to the table. so, if you think about my first four years the person who probably had the most influence on my foreign policy was a woman. the people who were in charge of moving forward my most important domestic initiative, health care, were women. the person in charge of our homeland security was a woman. my two appointments to the supreme court were women. and 50% of my white house staff were women.

so i think people should expect that that record will be built upon during the next four years. now, what i've made four appointments so far? and one woman admittedly a high profile one is leaving the administration -- has already left the administration, and i have made a replacement. but i would just suggest that everybody kind of wait until they've seen all my appointments, who is in the white house staff, and who is in my cabinet, before they rush to judgment. [ inaudible ] >> yeah, but, i guess what i'm saying, jacqui, is that i think until you've seen what my overall team looks like it's premature to assume that somehow we're going backwards. we're not going backwards. we're going forward. with respect to this truism about me not socializing enough

and patting folks on the back and all that stuff, most people who know me know i'm a pretty friendly guy. and i like a good party. and you know the truth is that when i was in the senate i had great relationships over there, and up until the point that i became president us was not an accusation that you heard very frequently. i think that really what's gone on in terms of some of the paralysis here in washington or difficulties in negotiations just had to do with some very stark differences in terms of policy. very sharp differences in terms of where we stand on issues, and you know, if you think about, let's say, myself and speaker

boehner, i like speaker boehner personally. and you know, when we went out and played golf we had a great time. but that didn't get a deal done in 2011. when i'm over here at the congressional picnic and folks are coming up and taking pictures with their family, i promise you, michelle and i are very nice to them, and we have a wonderful time. but it doesn't prevent them from going onto the floor of the house and, you know, blasting me for being a big spending socialist. and the reason that, you know, in many cases congress votes the way they do, or talks the way they talk, or takes positions in negotiations that they take doesn't have to do with me, it has to do with the imperatives that they feel in terms of their own politics. right? they're worried about their district.

they're worried about what's going on back home. i think there are a lot of republicans at this point that feel that given how much energy has been devoted in some of the media that's preferred by republican constituencies to demonize me, that it doesn't look real good socializing with me. charlie crist down in florida, i think, testifies to that, and i think a lot of folks say, well, you know, if we look like we're being too cooperative or too chummy with the president, that might cause us problems. that might be an excuse for us to get a challenge from somebody in a primary. so that tends to be the challenge. i promise you, we invite folks from congress over here all the time. and when they choose to come, i enjoy their company.

sometimes they don't choose to come. and that has to do with the fact that i think they don't consider the optics useful for them politically. and ultimately, the way we're going to get stuff done, personal relationships are important. and obviously i can always do a better job, and the nice thing is, is that now that my girls are getting older, they don't want to spend that much time with me anyway, so i'll be probably calling around looking for somebody to play cards with me or something. because i'm getting kind of lonely in this big house. so maybe -- maybe a whole bunch of members of the house republican caucus want to come over and socialize more. but my suspicion is getting the issues resolved that we just talked about. the big stuff. whether or not we get sensible laws passed to prevent gun violence. whether or not america's paying its bills. whether or not we get immigration reform done. all that's going to be

determined largely by where the respected parties stand on policy, and maybe most importantly, the attitude of the american people. now if the american people feel strongly about these issues, and they push hard, and they reward or don't reward members of congress with their votes, if -- you know, if -- if they reject sort of uncompromising positions, or sharp partisanship, or always looking out for the next election and they reward folks who are trying to find common ground, then i think you'll see behavior in congress change and they will be true whether i'm the life of the party or or a stick in the mud. all right. thank you very much, everybody. >> all right. in the final news conference of his first term the president uses the majority of it to talk about the debt ceiling. and the looming fight with

republicans over raising it. the president urging republicans to do just that, to raise the debt ceiling, arguing that failing to do so could tip the economy back into recession. he also said that the markets, in his words, would go haywire and the move would be a self-inflicted blow. to the economy. he also made it quite clear that he isn't willing to negotiate with republicans who want more spending cuts. the president saying you can't finish the job of deficit reduction on spending cuts alone. our own john harwood is at the white house. john, you listened to the president speak for about 45 minutes, with reporters. certainly didn't sound like a president who was ready to rise above. taking the approach they, meaning republicans in the president's words, will not collect a ransom for not crashing the economy. president also saying i won't negotiate with a gun at the head of the american people. this is a president gearing up for a fight, john. >> he was drawing a very tough line. said he wouldn't negotiate. said that if we don't pay our bills, if we default on some of

the obligations that congress has committed to, that that will be the fault of house republicans. this is a president who, having been squeezed by republicans over the last two years, has clearly decided that he went to the american people, made a set of arguments that were vindicated in the election, and he is now going to try to, as he said, break the habit of gett g getting -- having crisis-driven negotiations on the debt limit, on the budget, and it's going to be very interesting to see whether he can stick to that line. you know, he had a big stick behind him in the fiscal cliff negotiations at the end of the year, which was the expiration of all the bush tax cuts. does not have that now. simply has the budget sequester and the need to avoid that and also the need to avoid the potential for exhausting treasury's extraordinary measures to put off the debt ceiling, and if the economy tanks, if markets go haywire he

can say its house republicans' fault but he's going to be sitting in the white house and presiding over that mess and he's got to hope that republicans buckle to his point of view. that's certainly what he is signaling right now. >> does that make it likely he will have to negotiate with the very folks he said he won't? >> not leslie. necessarily. depends on what republicans do. he believes he's been able to portray republicans as the obstacle to reasonable compromise and he's going to try to draw that line again, and force them to buckle. now, when it gets to the zero hour and we have the potential to breach the debt ceiling then we'll find out whether he really won't negotiate at all or whether there's a some sort of fig leaf separation between spending cut negotiations and debt ceiling negotiations. but he was very clear and definitive here and i think it will make it more difficult than it was before this news conference for him to back away from the position that he just took. >> i'm sure you saw the politico

report this morning suggesting that several house republicans are floating the idea internally that a shutdown of the government may not be such a bad thing. is that rhetoric on the other side or how real is that? >> well, there's absolutely nothing new in that. republicans have made clear that they're willing to do that for quite some time. and, the calculation of the administration is that that will not end well for republicans. republicans were hurt as a party by the 2011 showdown over the debt ceiling. republicans were hurt as a party by the 1995 government shutdown that was engineered by newt gingrich and ultimately that helped bill clinton win a second term. i think the president is counting on the idea that he has the high ground, he's proven he had the high ground in the election, and he's going to make theme pay if they will not negotiate with him. it is a very clear standoff and we're going to see who blinks. >> all right, john, thanks so much. john harwood in the east room of the white house, wrapping up the president's final news conference of this first term.

busy day on wall street today. steve liesman is at the breaking news desk with some headlines coming from mr. lockhart of the fed. steve? >> yeah, scott, let me tell you what dennis lockhart of the fed is saying and i'll give you the context of why this could be important for fed policy. lockhart saying new asset purchase program is not qe incontinuety. that open ended does not mean without bounds. he's concerned about growth of the fed's balance sheet, and at some point he said qe could hurt market functioning and financial stability. among those things that could hurt is what the fed says every year to treasury from the earnings on its balance sheet, could be reduced whiled fed is in the midst of an exit policy. saying the open-ended nature of qe is now necessary. at least for now, but he is saying it could take three years to reach 6.5% unemployment. and he's making strong comments about the fiscal side, saying the next few months will be a moment of true fiscal policy urging the fiscal side to get on

board with what the fed is frying to do to help the economy. 2013 he says will be a test of the country's ability to govern public finances. now, scott, let me refind you, last week we had a story talking about the divisions on the federal reserve, and questioning who was part of this. was it the more hawkish part that wanted to end the qe in mid 2013 or were there centrists involved? lockhart is a centrist and he is now identifying himself as one of those who seems to have problems with the ongoing or the open-ended nature of the quantitative easing program announced by the federal reserve. so, maybe this does suggest now lockhart doesn't have the vote this year but it maybe suggests that the centrists on the board, rather than just the hawks have concerns about this policy going forward, scott. >> steve it all makes mr. bernanke's speech later today at 4:00 after the market closes all the more important. do you expect that he's not only going to address but be asked about these divisions inside the fed? >> of course the questioning, i

believe, is going to come from susan collins from the university of michigan who is a very smart person when it comes to monetary policy. also understand there will be questions from students and from twitter and yeah the question becomes does bernanke feel a need now, given what happened in the minutes, given the story we've reported, now given what lockhart said does bernanke feel a need to redirect the market's expectations of quantitative easing in 2013. >> steve, thanks so much. steve liesman with the latest there. all right, coming up on halftime we are trading today's market story. that is apple. the stock is falling below 500 bucks for the first time in nearly a year. we're going to talk to the man who saw the slide coming, told you about it, and find out where he thinks apple now goes. with the spark miles card from capital one, thor gets great rewards for his small business! your boa! [ garth ] thor's small business earns double miles on every purchase, every day! ahh, the new fabrics. put it on my spark card. ow. [ garth ] why settle for less? the spiked heels are working.

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and that grease fires have to be smothered? the more you know, the better you can plan for whats ahead. get smarter about your insurance. ♪ we are farmers bum - pa - dum, bum - bum - bum - bum ♪ welcome back. let's talk about certainly what is the biggest stock story of the day. that is sour apple. the stock is falling below 500 bucks for the first time in nearly a year following reports it's dramatically cut iphone component orders. joe, you have been among the most active traders of apple over the last several weeks, if not months. what do you make of the story? >> i make of the story that obviously last week i levered up a little bit too much and expended way too much mental capital. on that open where you got apple 12 dollars higher, for apple to open $12 higher last thursday and go straight down that's emblematic of a stock that really does have some problems. i think analysts are coming

forward right now. i think analysts are very concerned that they've been relatively slow in coming forward and reducing estimates. i think what you do with apple right now, i hold a very small position, a quarter size position right now. it's trading somewhere around $500. i really can't tell you where we're going to be post earnings other than to say, probably buying volatility in apple after earnings might be the best trade. >> josh brown, you know, it seems to be that this margin issue is dominating the conversation. however, if you believe this story, that apple has dramatically cut component orders for the iphone, then you start -- you really have to take these competitive pressure stories more seriously. that samsung is eating into apple, in ways more dramatically than maybe the market expected. >> very possible. it could also be a chase where china was nowhere near the ramp-up that they expect out of the gates. i really don't know. i'm not speaking to suppliers in asia and i think for investors right now this is way too difficult of a stock. it's a stock that i liked by the way. i was bullish on it at 570, at

550. but it's gotten really difficult. i think what you probably want to do is take the risk of missing a pop and buy it after earnings. let's hear the company respond. because right now, scott, they've not said a word. we also heard this same kind of thing in december, they didn't respond to that. see what they say on the call about guidance before we try to jump to conclusions and perhaps catch a falling knife. >> think you'll have to wait about ten or eleven days or so. >> right around the corner. i don't want to -- i like the company. >> stephanie, what do you do? >> the production cuts are really not that new. we've been hearing about this for a really long time. so gross margins, i've been worried about that since november that's actually why we trimmed it back in november but it's earned 26%. everybody's talking about lowering numbers, i kind of think down in 500 level it's a risk/reward that's interesting. i agree with josh, it's hard to get involved in that. what do you want to do? look at broadcom. 10% of their customer is apple but 10% is samsung and fiscal

and lucent alcatel and i think that's the better way to play better visibility they just raised guidance by the way, too. >> i agree. i actually take the other side with josh. i think it's viable. it's like a viable dip similar to what we saw in december remember december is always the strongest quarter for apple. it always surprises on the upside going in. a lot of support below 500 dollars here. i'll be buying it on the dip. >> you've got to be nimble as hell, though, if you're going to do that? the last time the stock pulled back, had the nice run-up into the very end of the year where maybe a lot of the bulls said okay the stock is now back, it's found its footing. the end of the year tax selling is now over, it's safe to get in and here we find ourselves going below 500. >> the other thing you can do is not be doctrine air and say right here i'm planting my flag. you could buy this in increments and say this is something i want to be in for awhile and i can't take the risk that 500 is the low and i didn't buy any. so you can kind of piece your way into this. keep in mind the yield is now

higher than the ten year trerry. so if you're going to own stock this is not a terrible stock to own. >> a low yielding stock as it is. that says a lot about a lot. our next guest could very well be known as the man who saw it coming. citi's glen young cut apple shares almost a month ago on the very concerns that have the stock selling off today. he's back with us on the fast line live from new york city. glen, welcome back. >> thanks. >> separate fact from fiction. how real are the worries that the market is disseminating today. >> well, you know, as we say we downgraded apple a month ago. we lowered numbers on the big supplier to apple and downgraded lg display as well. from our perspective those cuts are real. i think it's still unclear exactly why they're cutting. you could argue they overordered in q4. maybe yields have expanded. but the cuts -- >> what's interesting glen is that you've got every apple bull seemingly on the street today either putting a note out or

making a comment or defending the stock by way of saying, oh, this is old news. i get it. okay. it may be old news the market was sniffing it out guys like you were sniffing it out you know weeks and weeks ago but now it seems as though the market is willing to take seriously what the most bullish people on wall street always want to ignore and that's negative news when apple comes down the pike. >> here's a way to think about it. the article that you see today for example are suggesting that maybe this is a demand issue for apple and again we can't be sure but what i can say is demand isn't great. maybe it's just good. what we can also say is that a year ago or two years ago apple had open field running with really no competition. and now they have competition. and i hear you guys talking about margins and i think that's really the issue here, because, for a company that now faces competition, but who has 75-plus percent of the global profit pool in hand sets you've got to figure that's going to be hard for them to sustain. >> well margins aren't going to be good if they come out with a lower priced iphone then. that's going to be the issue

that everybody then hangs their hat on. the fact that you see margins were slowing. now they're coming out with a low priced phone and margins are going to be less than what we want them to be. >> yeah, let me just make one other point which is think about all big tech stocks when margins are coming under pressure. what do we see? look apple is already down a lot. i think you know, traders talk about it. i can understand their points of view. but generally speaking, when a tech stock is coming under margin pressure after that big pullback it's a stock for some time here and we think that's probably the case for apple for awhile. >> i would just ask, what do you make of chatter going around this morning that apple could come out, we do earn earnings or sometime after with a $50 billion buyback is there any merit to that chatter or just wishful thinking on behalf -- >> i have no insight as to what they will or will not do. obviously they have enough cash so it's something that's in the realm of possibility we have no -- >> glen, just quickly. you say demand is good not great. the iphone is the most important product that apple makes.

street estimates are about 40 million to 50 million in the quarter. what does good mean? >> i think good is in line with consensus, between 45 and 50 for the fourth quarter. the december quarter. the real issue is going to be how much is the falloff in the first quarter. the production numbers that we're all seeing look like down 50%. and that i think would be worse than what the street is expecting. >> you're comfortable where you are now? few elector neutral? >> yeah, comfortable. >> glen, good to catch up with you again. we'll talk again soon. coming up on hfl time a flood of bank earnings will hit the street this week. there's one financial stock you should avoid.

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it is time now for halftime's top three trades. first up is amazon trading again, all-time highs, up more than 50%, simon, over the past year. >> yeah, amazon is partying like

its a it's 1999. >> downgrading american express to neutral, joe? >> discover is on conviction -- >> yeah, yeah, discover and capitol 1. >> they feel good about discover, better about capitol 1 and american express is the least favorite. however, the reaction today, american express is down, the least of these, i think all three work. american express is fine. earnings last week expense management is excellent. i would stay with it. >> finally the flu trade. as the flu outbreak spreads to 47 states. josh? >> yeah, so, these are stocks that have won this huge battle. there were ten big drug chains and now basically 2.5. i would not think the stocks were 52-week stocks because of the flu.

i think they were just the last men standing. >> the banks set to record earnings, numbers are likely to determine gains in the sector can continue. chris wailian covers the space. came all the way to jersey here. live onset, good to see you. >> good to be here. >> good d we learn anything from wells fargo last week that will give us smart decisions to make for this week? >> a lot of earnings are coming from cost cutting. wells took a buck 50 out of interest expense. so there is a lot of pieces to how they made earnings. revenues are week. going forward, i think volumes or mortgages, with the big banks will start to tail off, compared to the big boom and refinancing we had last year. >> what does it mean as we look the a the individual names that will be reporting this week? who to go to, who to stay away from? >> i think in general, citi and ba have the most in earnings on revenue. as a banker, i look at these on

valuation. it really surprise med that credit suise came out, i think it would be closer to book value. i think those names are most promising. with j.p. morgan around book value, i think that's what it is worse. >> which banks do you like better? >> i like smaller banks better. you still have a lot of headline risk in some big servicers. i think you have to realize we are seeing a sea change of business models. going from where the banks are dominant to companies buying a lot of special services. i think situated nicely to take business from the banks because we are penalized by dodd-frank et cetera. this could be expensive to be in the mortgage business, getting over 15% intangible common. you have to have a hundred percent risk rate. >> what is the name to stay away

from? >> look, i don't put buy/sells on stocks. i'm an investment banker. i think there is huge risk from revenue, which i would expect, ba has done a lot to dig themselves out of mortgage mess, but they have to settle country wide, for example. that front and center now on the court. >> if you're an investment banker, what do you think for m & a in. >> you will still see resolution by fdic. those will result in sales. you will see voluntary sales as well. think about it, if you run a regional key corp at barons this week, you are barely at this week. you want it build value in your business. i think banks that are still down on their luck trading at a significant discount to book, they could get sold. voluntarily in most cases, i think. but for most others that survived and come back to fit

thirds and keys, i think they will tough it out. these models will be much more pedestrian than they have been. if mortgage and gain on sale isn't driving it, then you are looking at asset management. bank of america for example. >> chris, we've got to run. >> all right. >> have you back soon. final trades next on halftime. [ male announcer ] you are a business pro.

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